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Amazon Web Services (AWS) CEO Andy Jassy sat down with me for our yearly exclusive conversation leading up to the 7th AWS re:Invent – their annual customer conference that has become the industry’s most significant cloud event.

In a candid and wide-ranging interview, Jassy looked relaxed and confident as I asked him about the state of the business.

“There is insatiable demand for AWS cloud services,” says Andy Jassy, CEO of Amazon Web Services (AWS). For AWS another year, another sold-out show. For Jassy, AWS is turning out to be his trillion dollar baby, but Jassy is unflappable when it comes to celebrating victory with their big lead in cloud computing. AWS has been in the market for 12 and a half years and Jassy says that there's no contentment or lack of hunger in any way from anybody on the AWS team.

“Cloud computing is still day 1. There is so much more work that we can do,” says Jassy

AWS is on an unstoppable pace and this week 50,000+ attendees will descend on Las Vegas for another year of sessions, training, boot camps, networking events, and ground-breaking announcements that will build on AWS and introduce new cloud services and capabilities that extend the world’s #1 cloud to datacenters, the edge, and to new industries and workloads for tomorrow.

AWS’s business continues to explode with growth. With competition ramping up, Jassy gives insight into how AWS is pushing forward faster than ever and raising the bar on the competition and increasing the value to customers.

“If you look at the continued pace of innovation in AWS this year, we'll launch a little over 1,800 significant services and features in 2018 up from 1,400 a year ago. And a thousand the year before that. The pace of innovation is getting faster and faster,” says Jassy.

This year AWS is a nearly $27 billion revenue run rate business growing 46 percent a year over year. And yet, the cloud industry is just now seeing the early stages of the enterprise and public sector adoption.

AWS cloud and its’ dominance of Information Technology (IT) have come a long way in its 12 1/2 years of existence. The cloud competition is racing to catch-up, but there come consequences with the struggle to keep pace with AWS. Google has had turmoil about how to compete, and Microsoft has limited offerings from the diseconomies of scale trying to replicate AWS in a short period of time, others just gave up and focused on hybrid cloud services.

“There is no compression algorithm for experience,” Jassy says when pressed for a response on the copycat game the competitors are taking.

According to Jassy, AWS‘s one consistent formula is a focus on its customers’ needs and has kept their view of the world all about “services” (web services) that meet these needs. With a strong management discipline, decentralized teams, and data driven operating plans and reviews, the way that AWS manages its operations and continues to innovate are proving to be a competitive advantage despite the land rush to cloud. “AWS moves fast, listens to customers, and creates value on top of our already successful cloud-computing infrastructure. We're consistently thinking two to five years forward,” says Jassy.

In the not so distant future, AWS envisions a new generation of developers that won’t think about instances, servers, and clusters. Developers will focus on writing software, or possibly purchasing Lambda functions, and it will automatically be available and connected across every imaginable service in the infrastructure. “We are expecting a totally different programming model. And so we're thinking a lot about that on the compute side and working very hard there,” says Jassy.

New Kinds of Workloads

There are a number of enablers that are powering the cloud computing growth for AWS and the industry. Businesses large and small are seeing the cloud as being secure, and operationally more powerful with lots of computing capability. According to Jassy, “we’re rethinking how to use compute in a way that has changed the speed and receptivity of adoption from businesses.”

Jassy continues, “Although EC2 instances will be around forever, containers and serverless computing are completely rethinking the basic unit of compute which is getting much smaller, and the new kinds of workloads benefit from different types compute power.”

AWS already has more types of instances and instance families than any other provider. Increasingly, Jassy says that customers are running things like containerized microservices and scale-out distributed workloads without thinking about servers, or clusters, or auto-scaling.

In 2014, AWS pioneered the event-driven serverless computing space with the launch of AWS Lambda. With Lambda, developers can define a trigger that will run the code, and it will automatically run and scale code with high availability.

AWS also offers cloud-integrated container services with both Amazon Elastic Container Service and a managed Kubernetes container offering. According to the Cloud Native Computing Foundation, most of the containers applications running in the cloud are running on AWS.

Anyone who attended Oracle Open World this year knows that database have also become a highly contested battleground. Despite what Larry Ellison, Chairman of Oracle, may have said on stage, many customers are migrating to AWS database offerings. Earlier this year, Verizon named AWS as their preferred public cloud provider, citing Amazon Aurora – AWS’s relational database engine – as a key reason for the shift.

“Customers just don’t want to pay more if they don’t have to. We have yet to meet a single enterprise customer who is not looking to flee Oracle and SQL Server. And, we have an option for them in Aurora that is just as performant and available as the commercial-grade databases at one-tenth the cost.”

AWS and Jassy are betting big on a new set of workloads that they believe enterprises want. These new workloads are not just migrating what enterprises are currently doing on premises to the cloud but net new workloads that are unique to cloud computing.

AWS says the days of the one-size-fits-all monolithic database have past, and developers need a variety of databases to serve modern applications with the best performance, scalability, availability, and the lowest cost. This includes Amazon Aurora, a fully MySQL/PostgreSQL compatible database engine with at least as strong durability and availability as commercial grade databases but at 1/10th of the cost; a highly scalable and fully managed NoSQL database service with DynamoDB; a fully-managed graph database service with Amazon Neptune; and several other options.

Jassy elaborates, “There are net new workloads that enterprise customers are excited about and that haws has the broadest, most capable offering, such as machine learning and AI, analytics, Edge, serverless, and IoT. Enterprises are figuring out their migration over several years and there's this real, palpable excitement about these new workloads as net new opportunities they can get started on now.”

Changing the Game in Cloud – Machine Learning and AI

Many think cloud is not only here to stay, but also will power new sets of products, services, and business models like machine learning and artificial intelligence. According to industry expert and now venture capitalist at Greylock PartnersJerry Chen, “Machine Learning is the new SQL.”

When asked about the state of Machine Learning being done on the AWS Cloud, Jassy was quick to respond that the vast majority of Machine Learning being done in the cloud today is being done on AWS.

“In fact, tens of thousands of customers are using AWS machine learning services, including Cox Automotive, Major League Baseball, FINRA, DigitalGlobe, Expedia.com, Formula 1, NASA JPL, NFL, the World Bank, and many more,” said Jassy.

At last year’s re:Invent conference, Jassy launched Amazon SageMaker, a fully managed service that removes the heavy lifting and guesswork from each step of the machine learning process. AWS hopes that SageMaker will take up the task for making machine learning viable for more businesses and developers.

“You can imagine all the things that people want in machine learning and artificial intelligence area that we're working on, that we'll continue to work on in the future. I think it’s super early in ML and AI,” says Jassy.

Jassy continued, “In the year since we launched SageMaker, we’ve iterated quickly and have released over 200 major new features and capabilities for the service. Because of this rate of innovation, and the way it’s helping our customers make rapid progress in their machine learning journey, we are seeing major companies like Intuit, 21st Century Fox, GE Healthcare, and the NFL who are making it their standard for machine learning development.”

AWS Stack for the Enterprise On-Premises?

A few short years ago, Jassy was adamant that all workloads will move to the public cloud, but that it would take time, saying that some workloads would move sooner than others. Over the past several years, AWS has delivered services like Amazon Virtual Private Cloud (Amazon VPC), AWS Direct Connect, and Amazon Storage Gateway to make it easier for customers who want to run their on-premises datacenters alongside AWS.

“When we think about hybrid, we think about on-premises datacenters and the cloud, and the cloud being AWS. We believe that there's a really substantial transition going on that we're in the middle of, where the majority of companies are not going to have their own datacenters, and when they do -- will have much smaller footprints than they have today,” says Jassy.

Then in 2017, AWS partnered with VMware to introduce VMware Cloud on AWS, giving the vast majority of companies who are virtualized on VMware the ability to use the same on-premises VMware tools that they had been using for years to manage their infrastructure on AWS. Earlier this year, AWS announced Amazon Relational Database Service (Amazon RDS) on VMware, a service that makes it easy for customers to set up, operate, and scale databases in VMware-based environments. The solution runs on-premises and is managed in the cloud.

“Our relationship with VMware is very strategic. Our technical teams are deeply integrated on development and we’re aligned on the go-to-market front,” said Jassy. “VMware Cloud on AWS is really resonating with our customers. We’re excited about the momentum we are seeing.”

Cloud computing capabilities in the datacenter cements the idea that cloud computing has won. Wikibon Research predicted this a few years ago in the first ever cloud report for on-premises computing (free no registration required). The Wikibon analysts confirmed the reality that companies were changing course to run in the cloud with how they operate their infrastructure and develop their applications.

Other than its solutions with VMware, AWS hasn’t had an AWS on premise offering to date. Meanwhile, Microsoft Azure has announced Azure stack on premise with uptake from customers using it for remote offices and edge computing. Jassy, however, thinks the current approach isn’t working and, based on the motivation from its’s success with VMware and requests from customers, he sees it as an area ripe for innovation.

According to Jassy, “Current on-premises offerings are falling short and are not seeing a lot of traction. They provide a limited set of functionality from what is available in the cloud that is perpetually out of sync, and requires customers to use different tooling to manage the cloud and on-premises versions and do the heavy lifting of managing hardware and software.”

Jassy shares their hybrid vision, “what we hear consistently from customers is that for their existing on-premises datacenters that they're not ready to retire yet, they would like to be able to run them as seamlessly as possible as they run AWS in the cloud. They want to use the same APIs, the same tools, the same hardware and functionality across on-premises and the cloud.”

When asked directly if they will have AWS cloud for on-premises Jassy responds,

“If we were going to do something on-premises, bring compute or storage or some of those capabilities on-premises, we would try to reimagine what's there, because we don't think the current model that's being pursued is a good experience for customers, or is getting a lot of traction, and we have some ideas on how to make it a better experience.”

AWS Pioneering on the Edge of the Network

Analysts predict that enterprises are developing plans and long-term strategies for the edge or Internet of Things (IoT). These new plans for IoT are expected to adopt a cloud architecture that is a full IoT hybrid cloud solution, capable of managing, storing, processing, protecting and deleting 95% of data at the Edge today, and about 99% of data at the Edge in the future.

Jassy shared his view on the edge of the network as lots of endpoints you can call the edge. A big edge is the datacenter and a smaller edge can be a location somewhere in the world with no connectivity. “Over time, when people talk about hybrid, and look out 10 to15 years from now, a lot of the on-premises piece is going to be the edge. And a lot of them are going to be devices.”

Analysts in the industry used to believe that more and more edge devices would somehow be bad for the cloud. Dave Vellante, analyst at Wikibon, disagrees and believes it’s clear that it's a giant opportunity for the cloud. “The cloud that has lots of offerings that support the edge and will have a significant advantage over others who don’t have a larger set of offerings,” said Vellante.

Jassy agrees and explains why the edge is going to be a big opportunity for the cloud. “Because most edge locations are either devices today or datacenters over time, they have smaller footprints, and will have disproportionately small amounts of compute and storage available, so all the heavy computation and analytics are going to be done up in the cloud. And what you're going to be doing at the edge is taking actions on things that you can't afford the round trip to the cloud or where you don't have connectivity at all,” explains Jassy.

Customers acknowledge that the cloud has been great for computationally heavily or analytic workloads or the place to store the data of the workload or applications build and the machine learning piece.

Jassy says the brains will be in the cloud and the action for compute will be at the edge. “The brains are going to be in the cloud, and the inference and the predictions and the actions that have to have low latency will be done on the device or the edge itself. Customers are going to want the kind of hybrid implementations that let them do the compute and storage they need to do there, but also seamlessly connect with the rest of the cloud,” said Jassy.

As hybrid continues to change the landscape, AWS looks to continue to add services for a true programmable infrastructure for new workloads that use computing and edge IoT. The only question remaining is how does AWS stand up connectivity to connect the edge of the network to achieve the vision of seamless cloud, on-premises, and IoT edge.

Another year, another AWS re:Invent conference, another sold out show! Get the popcorn for another year of AWS pioneering something.

I'm the founder of SiliconANGLE Media Inc., an independent Silicon Valley media company covering the intersection of Computer Science and Social Science. It's also the…

I'm the founder of SiliconANGLE Media Inc., an independent Silicon Valley media company covering the intersection of Computer Science and Social Science. It's also the home of SiliconANGLE.com, TheCUBE.net LIVE video broadcasting at top tech events. We love the enterprise tech and emerging innovation.
I live in the heart of Silicon Valley (Palo Alto) where I research and report on the top trends in technology entrepreneurship, venture capital, consumerization of enterprise and emerging technology innovation.